October 25, 2011 / 5:30 AM / 8 years ago

China dairy farmers accuse Nestle of underpaying - Xinhua

HONG KONG, Oct 25 (Reuters) - Dairy farmers in northeastern China are protesting Nestle SA’s dominant market position, saying the Swiss food giant has been buying milk at below-market prices, China’s official Xinhua News Agency reported.

Some farmers said they had been underpaid for their milk, Xinhua reported, citing a 2002 pact that requires all milk in the city of Shuangcheng, Heilongjiang to be delivered to Nestle.

Farmers had complained about manipulation of measurements and an unfair grade payment system, the report said.

“Nestle doesn’t cheat (farmers). Nestle does not tolerate such practices,” Nestle (China) Ltd spokesman Jonathan Dong told Reuters on Tuesday.

“We have already launched an investigation together with the local authorities to make sure this investigation is fair, is true and is effective,” Dong said, adding that Shuangcheng Nestle was operating normally.

An official with Shuangcheng Nestle was quoted by Xinhua as saying that the farmers were paid by the grade of their milk, but the system was only used until July.

Shuangcheng Nestle is a joint venture between the Swiss food giant and the city and contributed 17 percent of the city’s revenue in 2010, Xinhua said. (Reporting By Sisi Tang and Donny Kwok; Editing by Chris Lewis and Matt Driskill)

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